Havilah Resources - Kalkaroo Dome

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Kalkaroo Project (Copper-Gold-Molybdenum)

Summary

Kalkaroo is a medium size copper-gold deposit containing over 620,000 tonnes of copper and 2 million ounces of gold in a measured resource of 124.5 million tonnes of 0.50% copper and 0.39 g/t gold. The deposit is amenable to a bulk open cut mining.

History of Exploration

Kalkaroo was explored by a number of major mining groups in the past including Placer, Newcrest Mining and MIM Exploration, who completed more than 45,000 metres of drilling in the region. Following a detailed evaluation of all historic exploration data, Havilah developed a 3D geological model of an interpreted copper resource envelope which it commenced drill testing in July 2004. This model was not tested by previous explorers.

Over the following six months Havilah completed twenty-one 100m spaced drill traverses over a strike length of 2000 metres and achieved wide ore grade copper and gold intersections on every section line, such as the following:

78 metres of 0.90% copper and 0.61 g/t gold in KKRC006
36 metres of 3.13% copper and 0.98 g/t gold in KKRC039
42 metres of 1.37% copper and 1.66 g/t gold in KKRC022

Click to enlarge

Subsequent drilling campaigns expanded the mineralisation to the west, in an area known as West Kalkaroo, where some of the best drilling results were obtained, including 102 metres of 0.83% copper and 1.6 g/t gold in KKRC136.

During the exploration phase Havilah's drilling was restricted to RC percussion drillholes that were somewhat limited in depth owing to frequent high water inflows. Where Havilah's drillholes duplicated earlier explorer's drillholes there was invariably good correlation of assays, providing a high degree of confidence in the drill results.

Geology

Kalkaroo is a replacement style copper-gold-molydenum orebody located on the northern faulted portion of a major structural dome. Hydrothermal fluids have replaced particular favourable units in a 150-200 m thick mine sequence package of rocks. Structural preparation by major cross-cutting faults appears to have been important in creating open spaces and channeling mineralizing solutions. Excellent exploration potential exists in unexplored strike extension of the mine sequence.

Click to enlarge
Oblique diagrammatic view across the Kalkaroo north and south domes (multi‐colour outline)
showing the main cross structures (dashed white lines). Note the close spatial relationship
between the Kalkaroo fault zone and the Kalkaroo orebody and the new copper discoveries
that are closely related to other faults transecting the domes.

In gross shape the Kalkaroo orebody forms an arcuate, north- dipping sheet, which is disrupted by extensive faulting at its western end. The ore is sandwiched between well defined footwall and hangingwall rocks, and is remarkably predictable and consistent over the entire 2.5 km of strike known from resource definition drilling.

Click to enlarge
The Kalkaroo orebody (yellow) sits between footwall (blue) and hangingwall (green) and is cut by faults

A 3D fly-through model of the Kalkaroo orebody can be viewed at:
http://www.youtube.com/watch?v=mL5V5b4MADs

The orebody shows typical supergene enrichment features in its upper part, caused by oxidation of the primary sulphides in the weathering zone. This is manifest in a stratification of the ore minerals from top to bottom, forming four main ore types as follows:

1. Supergene free gold, with generally minor copper, largely recoverable by gravity methods.
2. Native copper and gold, largely recoverable by gravity methods.
3. Chalcocite dominant with gold, recoverable by conventional flotation.
4 .Chalcopyrite dominant with gold, recoverable by conventional flotation.

Feasibility Study

The proportions of the four ore types comprising the Kalkaroo orebody are summarized in the following table.
Kalkaroo Proportions of the Four Ore Types by Tonnes and Cu Metal Equivalent

Mineralisation type	Tonnes	% of total tonnes	Cu equiv grade %	% of total Cu Metal equiv	Cu %	Au g\t	SG
Saprolite gold	18,690,232	12.97				0.74	1.86
Native Copper	13,120,485	9.11	0.95	13.02	0.55	0.58	2.02
Chalcocite	29,525,558	20.50	0.85	26.23	0.56	0.43	2.49
Chalcopyrite	81,863,723	56.85	0.71	60.74	0.47	0.34	2.68
Total	*144,000,000*	*100*		*100*

A $14m feasibility study was completed on the Kalkaroo project in 2010, with funding provided by Glencore International. Based on more than 360 drillholes totalling approximately 65,000 metres of drilling, Havilah's geologists have developed a detailed geological model of the Kalkaroo deposit. Additional recent work on the block model has generated revised Measured and Indicated JORC resources for the Kalkaroo deposit as summarised in the following table.

Kalkaroo New Resource Estimate – February 2012

Classification	Tonnes (to 4 sf)	Cu equiv. grade %*	Cu grade %	Augrade g/t	Cut-off grade	SG
GOLD CAP Measured	18,690,000			0.74	0.2g/t	1.86
KALKAROO CuAu Measured	85,890,000	0.81	0.52	0.41	0.3% Cu equiv.	2.50
KALKAROO CuAu Indicated	38,620,000	0.68	0.45	0.33	0.3% Cu equiv.	2.65
KALKAROO CuAu Total Meas & Ind	124,510,000	0.77	0.50	0.39	0.3% Cu equiv.	2.55

* copper equivalent grade = copper assay in ppm + (gold assay in ppm x 6866), reflecting the fact that 1 ppm Au has an equivalent value to 6866 ppm Cu using a conversion factor of 32150.746 troy ounce per metric tonne. The gold and copper prices used in the copper equivalent calculation (US $7,980/metric tonne for copper and US $ 1,704 / oz for gold) are the average prices for the six monthly period from 1 August 2011 to 31 January 2012 sourced from World Bank commodity price data, as published on their website (www.econ.worldbank.org). Metallurgical recoveries have not been factored into the calculation, because metallurgical test work indicates comparable metal recoveries for both copper and gold.

Based on this resource, Kalkaroo is calculated to contain 622,500 tonnes of copper and 2 million ounces of gold as summarised below. A summary of the important criteria related to the assessment and reporting of the Kalkaroo copper-gold resource is provided in the table at the end of this document.

Kalkaroo Metal Inventory – February 2012

Classification	Category	Tonnes	Cu tonnes	Au oz	Cu equiv. t*
GOLD CAP	Measured	18,690,000		445,000
KALKAROO CuAu	Meas & Ind	124,510,000	622,500	1,561,000 Total 2,006,000	958,700
Current Price US$			8,450/t	1,770/oz

The contained metal is significantly higher than in previous resource models due largely to the higher input metal prices, additional drilling and metallurgical data and slightly differing modelling approaches and methodologies. Of note is the new resource for the Gold Cap orebody that sits on top of the main Kalkaroo copper-gold orebody (see image below). This orebody contains 445,000 ounces of gold in its own right at indicated gold recoveries of at least 95%, and will be mined along with the overburden in order to expose the main Kalkaroo copper-gold orebody.

Oblique view of Kalkaroo block model, showing gold cap (yellow) above main copper-gold resource (green)

The potential to define further ore outside of the present resource is high and would be expected to add further resources in the indicated and inferred categories in future.

Molybdenum, while ubiquitous in the Kalkaroo orebody, was excluded from the above resource estimate although a discrete inferred resource of 4.5 mt of 615 ppm molybdenum was defined within a section of the main copper-gold orebody.

Based on the geological resource model a new mining model is being developed using updated metal prices and updated estimates of capital and operating costs, and will be posted here shortly.

Havilah is presently evaluating a lower capital start up option that will treat the soft saprolite gold and native copper ore from the upper part of the orebody in a gravity processing circuit. This will potentially provide an earlier cashflow for a lower risk, lower capital option, with this cashflow being directed towards building the more expensive sulphide processing circuit, which will commence operation after year 3.

Native Copper Samples - Click to enlarge

Table of Assessment and Reporting Criteria

The following table provides a summary of important criteria related to the assessment and reporting of the Main copper-gold resource and the Gold Cap gold resource at Kalkaroo.

Sampling Techniques, Assay Data, Drilling Details

Criteria	Status
Havilah drillholes used in resource estimation	A total of 314 Havilah drillholes totaling approximately 54,981 metres are included. This includes a total of approximately 13,500m of drill core and 34,000m of RC samples.
Non-Havilah drillholes used in resource estimation	46 earlier non-Havilah drillholes totaling approximately 10,500m were also used in the resource estimation. This includes three generations of pre-Havilah drillholes, completed by major mining companies, namely Placer Dome, Newcrest and MIM. There is good correlation of the geology and assay data between these earlier drillholes and Havilah drillholes.
Drilling techniques	All RC holes were drilled using standard face sampling hammers with bit sizes ranging from 120mm to 136mm. Diamond core sizes ranged from NQ (50mm) to PQ3 (83mm). Triple tube methods were used where required to maximize core recoveries. Drill core was routinely orientated where ground conditions allowed, mainly using the spear technique.
Sampling techniques	RC assay samples averaging 2-3kg were riffle split as 1-2m intervals. Half core samples were collected on 1m intervals.
Drill sample recovery	Overall RC sample recoveries and diamond drill core recoveries were good and are considered adequate for interpretation purposes. Core recovery for Havilah diamond drillholes averaged 93 %.
Logging	All RC samples and drillcore was logged by experienced geologists directly into a digital logging system with data uploaded into an Access database. All drillcore and RC chip trays have been photographed. All drillcore and RC chip sample trays and some back-up samples are stored on site at Kalkaroo.
Quality of assay data and laboratory tests	A range of elements were analysed by a range of slightly different techniques by the four companies, all of which are considered acceptable. Havilah samples were also subjected to the following additional check assaying to provide more reliable results where coarser grained native copper and to a lesser extent, gold, was present. Screen copper analyses were routinely carried out for samples where native copper had been identified during geological logging. Screen fire gold analyses were routinely carried out where the initial gold assays were in excess of 0.5ppm. Assay data accuracy and precision was continuously checked through submission of field and laboratory standards, blanks and repeats which were inserted at a nominal rate of approximately 1 per 20 drill samples. No data quality issues of significance were identified.
Verification of drilling methods and sampling	Ten pairs of twinned RC/DD holes were analysed with comparisons made for the relative intersection widths, hole size, volume differences, metre x %Cu and metre x gm Au, RC sample size and quality and any possible contamination issues. It was found that although there were wide variations in total copper metal and gold metal calculations between twinned holes, the overall average RC and drillcore metal calculations produced similar results (within 8% for copper and within 6% for gold). There was no observed bias between the drill methods and no significant differences in intersection widths.
Location of drillholes	Diamond drillholes were surveyed at approximately 30m downhole intervals using an Eastman single or multi-shot down-hole camera or a digital camera. Earlier Havilah RC holes were not surveyed and were assumed not to have deviated significantly from their collar azimuth and inclination. Most later RC holes were surveyed in the rods with only dip measurements recorded. The last RC program used non magnetic drill rods to allow dip and azimuth readings to be collected with only minor (±1º) deviations noted.
Drillhole spacing and distribution	Havilah drilling was completed on nominal 50m sections perpendicular to the strike of the primary copper-gold mineralisation at Kalkaroo West and on nominal 100m sections perpendicular to the strike of the Kalkaroo Main Dome mineralisation. Holes were drilled towards the south at -60 to -75º. Earlier non-Havilah holes were drilled at various oblique angles and directions including to the north. The intersection angle is between 60 and 90 degrees through the Kalkaroo Main Dome style mineralisation and between 20 and 45 degrees through the more steeply dipping Kalkaroo West vein style mineralisation. Resource drilling is predominantly concentrated between 453800E and 456600E and between 6488500N and 6490000N. The deposit is largely untested deeper than 250m below surface.

Estimating and Reporting of Mineral Resources

Criteria	Status
Database integrity	Examination of the database has not revealed any issues of concern that could significantly affect the current resource estimation.
Geological interpretation	The mineralisation at Kalkaroo is located around the north plunging nose of a major structural dome and the bulk of the mineralisation is hosted by a specific package of sediments, the Mine Sequence (MS). The Dome is transected by a major E-W trending, subvertical, quartz-carbonate vein breccia system. A later shear offsets the MS and vein/breccia system by 200m to the north along the western limb of the Dome. Primary copper-gold sulphide mineralisation at Kalkaroo occurs as two main styles. Stratabound style – Kalkaroo Main Dome and lesser Kalkaroo West - mineralisation is hosted within the MS which dips away from the Dome at 30-45º. Vein/Breccia style - mainly Kalkaroo West - mineralisation is controlled by the quartz-carbonate breccia vein system within a gently W plunging anticlinal fold containing the MS. Best veining, alteration and mineralisation appears to be developed where the vein/breccia system intersects the MS lithologies. Secondary/supergene copper-gold mineralisation is developed as saprolite/oxide gold, native copper and chalcocite dominant zones within the weathering profile. The depth of weathering and associated supergene mineralisation is enhanced around the vein/breccia style mineralisation at Kalkaroo West where it reaches 275m below surface.
Estimation and Modelling Techniques	Polygons and hence triangulations are based on interpretations completed on nominal 50m sections for Kalkaroo West and nominal 100m sections for Kalkaroo Main Dome. Sectional interpretations are made perpendicular to the strike. Triangulated interpretations have been generated for the following lithological domains: Namba Eyre Saprolite (sap) Kalkaroo Main Dome (k), subdivided into k1, k2.2, k2.5, k2.8, k3.2 and k3.5 Kalkaroo West (kw), subdivided into kw1, kw2.2, kw2.5, kw2.8 and kw3.5 Kalkaroo East West Quartz Vein (ewvein) The block model was constructed with parent blocks of 15mE by 15mN by 15mRL. Within the lithological domains, the blocks were given a fixed size of 5mx5mx5m. Length weighted assay composites were used. Composite grades for Au were cut to 30ppm. Composite Cu grades above 10% were restricted to having an influence of only 5mx5mx5m during estimation. Estimation was performed using inverse distance techniques in combination with unfolding methodologies bound by upper and lower surfaces for each domain. Cu, Au and specific gravity were estimated separately for all domains. Up to three estimation passes with increasing search neighbourhood size was used. Search ellipsoid orientation was controlled using stratigraphic surfaces during estimation with unfolding methods. An octant based search was used for sample selection during grade estimation. A minimum of 3 and maximum of 20 composites were used per block estimate.
Moisture	Tonnes have been estimated on a dry basis.
Cut-off parameters	Gold Cap resource has been calculated using a 0.2g/t gold lower cutoff grade, and 30g/t gold upper cutoff grade. For the Kalkaroo main copper-gold resource a 0.3% copper equivalent lower cutoff grade was applied. Composite grades for gold were cut to 30ppm., while composite copper grades above 10% were restricted to having an influence of only 5mx5mx5m during estimation. The copper equivalent grade has been calculated as follows: copper equivalent grade = copper assay in ppm + (gold assay in ppm x 6866), reflecting the fact that 1 ppm Au has an equivalent value to 6866 ppm Cu using a conversion factor of 32150.746 troy ounce per metric tonne. The gold and copper prices used in the copper equivalent calculation (US $7,980/metric tonne for copper and US $ 1,704 / oz for gold) are the average prices for the six monthly period from 1 August 2011 to 31 January 2012 sourced from World Bank commodity price data, as published on their website (www.econ.worldbank.org). Metallurgical recoveries have not been factored into the calculation, because metallurgical test work indicates comparable metal recoveries for both copper and gold (in the range 80-95%). Based on comprehensive metallurgical test work on the various Kalkaroo ore types it is Havilah’s opinion that both the copper and gold have a reasonable expectation of being recovered in economic quantities in line with the metallurgical test results.
Bulk density	A total of 11,774 core samples were measured for density. Most SG calculations were made using the weight in air vs weight in water method.
Classification	Mineral resources have been classified on the basis of distance of blocks from the nearest drillhole, with due regard to the geological continuity of mineralization. Indicated Resource category applies to all ore blocks > 50m from the nearest drillhole while Measured Resource category applies to all blocks 50m or closer to a drillhole. In the geologist’s opinion it is unlikely that further drilling within the resource envelope would materially alter the current resource estimate for the Measured Resource category due to the excellent geological continuity of mineralization and accompanying host lithologies between drill sections and individual drillholes. Additional drilling is required to bring the Indicated Resource to a Measured status.